Schedule C is the form sole proprietors and single-member LLCs use to report business profit. Part II lists expenses by line. Here is what belongs on each one.
The lines
- Line 8, Advertising: Google and Meta ads, business cards, website costs, sponsorships.
- Line 9, Car and truck: standard mileage or actual vehicle costs for business use. Keep a log.
- Line 10, Commissions and fees: referral fees, platform commissions, payment processing fees are often put here or on line 27.
- Line 11, Contract labor: payments to independent contractors. Issue 1099-NEC for anyone paid $600 or more.
- Line 13, Depreciation and Section 179: equipment, computers, furniture, vehicles written off over time or all at once.
- Line 15, Insurance (other than health): liability, E&O, business property. Health insurance goes on Form 1040 Schedule 1, not here.
- Line 16, Interest: business loan and credit card interest.
- Line 17, Legal and professional: attorneys, accountants, bookkeeping software.
- Line 18, Office expense: supplies, postage, small software.
- Line 20, Rent or lease: office rent, coworking, equipment leases.
- Line 21, Repairs and maintenance: fixing things, not improving them.
- Line 22, Supplies: materials consumed in the work.
- Line 23, Taxes and licenses: business licenses, employer payroll taxes, state LLC fees.
- Line 24a, Travel: airfare, lodging, ground transport away from home.
- Line 24b, Meals: 50% deductible business meals. Entertainment is not deductible.
- Line 25, Utilities: business phone, internet, electricity for a business location.
- Line 26, Wages: W-2 employees, not yourself.
- Line 27a, Other: anything ordinary and necessary that does not fit above: software subscriptions, bank fees, education, dues.
- Line 30, Home office: simplified ($5 per square foot up to 300) or actual expenses via Form 8829.
The mistakes that cost money
- Putting health insurance on line 15 (it belongs on Schedule 1 and is worth more there).
- Deducting 100% of meals.
- Forgetting the QBI deduction, which is computed separately and is worth up to 20% of profit.
- Expensing a $4,000 laptop on line 22 instead of line 13 (fine under the de minimis safe harbor up to $2,500 per item, otherwise depreciate or elect Section 179).
- Skipping line 9 because the mileage log was never kept.
How ProfitBooks maps to this
Your chart of accounts is built for your industry, and each account carries its Schedule C line. At year end the category totals export in Schedule C order, so your preparer copies numbers instead of sorting transactions.